The Chinese leader, Xi Jinping, announced in 2013 an ambitious two-trade corridors: The One Belt and the One Road (OBOR) initiatives to link the Chinese economy with its neighbors to the West and to Central Asia, the Middle East, and Europe. The Belt and the maritime Road reach Venice in Europe. The economic geography of the participants is central Asia countries Kyrgyzstan, Kazakhstan, Uzbekistan, Tajikistan, and Turkmenistan along with Asian boundary countries. Additionally, the route of the 21st Century Maritime Silk Road is likely to include Guangzhou, Beihai, Haikou, Hanoi, Kuala Lumpur, Jakarta, Colombo, Kolkata, Nairobi, Athens, and Venice.
This Chinese-centric scheme represents one-third of the global GDP and an estimated one-fourth of global trade and could provide for significant economic transformation along both the Road and the Belt. The economic scheme is initially estimated to cost .9 trillion dollars during the first phase and an additional 3 trillion dollars in annual investments following the first stage.
US President Biden stated at the conclusion of the recent G7 Summit that the participating market-based Organization of Economic Cooperation and Development (OECD) economies agreed, “to a democratic alternative to the One Belt and One Road initiative.” To the OECD countries, transparency matters, and a market-based transnational-centric approach could provide a better opportunity for economic development. Our article proposes to highlight the important metrics and economic opportunities and challenges of the OBOR initiative.
China indicated that its financial institutions and banking sector could provide up to 8 trillion dollars to cover the cost of the needed infrastructure in transportation, highways, and port facilities going through over sixty countries, ultimately benefitting an estimated 60% of the world’s population. The current GDP estimates of China are 18% of the global GDP and of the United States, 25% of global GDP. From the Chinese perspective, OBOR will benefit the lesser economic region of China (Xingong) and other bordering Chinese regions in the west of the country. The Chinese manufacturing center will also benefit, and so will the steel industry, telecommunications, and transport. This could make large Chinese firms truly international in their outreach and pave their way to become global brands. Beyond China and its immediate neighborhoods, India, Pakistan, Indonesia, and Russia could be likely beneficiaries within a truly multinational market-centric framework, if implemented. Along the route, Iran, Egypt, and the Petro States could also see significant growth in inward direct foreign investment, particularly in the petrochemical industries. China, being the largest importer today of oil, could benefit in the building of oil and gas pipelines, as well as the growth of corporate strategic alliances in this sector benefitting state-owned and non-state-owned firms in this sector. Additionally, the OBOR is projecting further developments in Africa and Central Asia, estimated initially at a trillion dollars also benefitting Chinese firms.
The overall impact could streamline trade routes among China, Asia, and Europe and create significant corporate opportunities, partnerships, and strategic alliances. Small and medium enterprises (SMEs) are likely to benefit significantly and make it possible for these enterprises to enter newer markets. Ground transportation costs and red-tape trade inspections will decline and could streamline world trade and provide potential technological spillovers and improve efficiencies and create additional value-added logistical and digital chains, assuming this is done in a transparent, multi-lateral, market-centric framework.
Highly skilled technological jobs and spillovers are likely to come about, and the development and growth of artificial intelligence (AI) capabilities for various countries on the route will be the added benefits. Specifically, digital leader technologically savvy firms could enhance real-time tracking information, streamlining world trade. State-of-the-art warehouses, aided by high technology inventory management systems will provide for better planning and supplier collaboration alliances and partnerships. Moreover, standardization of customs clearing templates will enhance artificial intelligence and reduce human decision-making errors. Labor costs and shipment delay costs will also decrease. The virtual effect of the OBOR will streamline data processing, create IT infrastructure, and generate data that could be the lifeline of world trade in the near future.
The Digital Silk Road, so far, has not been addressed significantly, but its impact is likely to be as important, if not more so, than the transportation infrastructure system. Countries like Kazakhstan, Uzbekistan, and the Petro States could develop newer information technology capabilities and industries and increase the inflow of direct foreign investments if a multi-lateral, free-market-based approach is fully addressed and serves as a framework for the implementation of the OBOR
The benefits of both the infrastructure and Digital Silk Road must rely upon sound economic and corporate principles and capture both efficiencies and effectiveness employed within a multi-lateral non-Chinese-centric framework. Firms, companies, and enterprises along the route, whether the infrastructure or the digital, should reflect national-local enterprise capabilities and asset configurations and tap the multinational framework in order to be sustainable and competitive. The multinational configuration of these enterprises and their strategic orientation must build local and national capabilities to respond to national and local entrepreneurial needs and resources. The assets and capabilities must be decentralized and must capture best local self-sufficiency for the economies along the route.
While the Chinese president spoke of the OBOR Initiative as a new and successful global reach, the decentralization to benefit non-Chinese corporate players should be focused upon delivering benefits to provide for global efficiencies and advantages. The linkages and strategic orientations, using local and national assets and capabilities could bring about a transnational framework and balance global efficiency and flexibility with local-worldwide learning and genuinely create meaningful interdependencies and linkages to benefit all players along the route.
However, all political decisions, in order to be sustainable, must be economically cost-effective. The more the One Belt, One Road route attempts to capture both business and corporate efficiencies, the better it will succeed in making the route more effective, competitive, and sustainable.
Map credit: https://www.chinadaily.com.cn/bizchina/2015-04/15/content_20435585.htm
The success of the OBOR scheme, based upon a multi-lateral, market-based framework could reshape world trade to benefit China and Europeans and the countries in between. It could also create opportunities for cross-border foreign direct investment schemes and link the Petro States and sovereign wealth fund (SWF) countries to Europe and Asia by improving cross-border corporate alliances and partnerships. It could connect parts of Africa to a new corridor that will allow the African states to better participate in the 21st Century.
Big business and Fortune’s list of the Global 500 enterprises have gone through significant changes during the last three decades. While OECD economies dominated the list since its inception, today American firms are still highly represented while China’s increase in representation among the leading corporate giants stands, according to The Economist, at 76 out of 100 most valuable firms. While the US is still dominant, Europe’s representation on the Global 500 has declined significantly over the last three decades. In June 2021, the G7 Summit brought together the European Union as well as the United Kingdom to explore better economic opportunities for growth. And a transnational approach that is truly multinational could also benefit Europe.
The US accounts for a quarter of global GDP and over 45% of corporate activities. By contrast, China accounts for 18% of the global GDP and 20% of business activities. Emerging countries’ firms have also acquired their place among the leading corporate giants. Saudi Aramco, one of the most valuable global enterprises, is estimated to be equal to about 2 trillion dollars. The players in this global economy are emerging to be the ones who have a large GDP and home market, a well-developed capital market and a high level of innovation, and enterprise formation with artificial intelligence.
The road ahead for the OBOR will be challenging; however, if managed well from a multi-lateral, market-based perspective, all of the participating economies could improve their per capita income and emerge to have better-coordinated macroeconomic policies. This could also strengthen the development and growth of market-based enterprises, as well as state-owned enterprises that employ openness and transparency for the participating players and improve the climate for global market linkages. It could also add to the economic resiliency of the participating countries and could reduce the excessive gyrations in GDP growth rates. It will also strengthen labor markets, particularly in the Petro States, where this could call for increased participation of females in the labor markets of their countries and enhance gender-economic balance and opportunities.
A reformed, streamlined tax system could also strengthen government funding; whereby, the ratio of taxes collected to governmental expenditures could improve, leading to balanced and sustained growth. Corporate governance through best market-based practices could enhance accountability and legitimacy for all players in a market-based system that will build a better climate for future multi-lateral corporate trade and investment linkages and improve external foreign-exchange reserves for the countries along the route.
The Journal of Asia-Pacific Business has a seemingly very specific scope, but the region includes such wonderful variety, and our articles for this issue reflect that well. Our first article, “Green Marketing Practices and Issues: A Comparative Study of Selected Firms in Indonesia and Philippines,” contains a collaboration among colleagues from different universities: Maria Agustini of Unika Soegijapranata, Anna Baloran, April Bagano, and Ana Tan of University of San Carlos, and Sentot Athanasius and Berta Retnawati of Universitas Katolik. The article analyzes the implementation of green marketing practices, and the effects of these newer practices on consumers’ behaviors. The second article, “Income Convergence across Asian Economies: An Empirical Exploration,” by Sunetra Ghatak of the National Institute of Public Finance and Prabir De of Research and Information System for Developing Countries, is a longer-term study that focuses on the narrowing of income disparity over time in Asia.
The third article is by Anantha Raj. A. Arokisamy of RMIT International University. “The Uncharted Territory: Plotting the Relationships between Perceived Organizational Support, Work Engagement and Expatriate Retention in Vietnam,” uses a quantitative method to research methods of retention of expatriate faculty members in higher education. Our fourth article, “Lookism in the Chinese Job Advertisements,” is a collaborative effort from Yuanlu Niu of the University of Arkansas, Rose Baker of the University of North Texas, Xu Xu of Henderson State University, and Malar Hirudayaraj of Rochester Institute of Technology, which investigates the prevalence of “lookism” in Chinese advertising and its possible effects on female-dominated occupations.
It is our hope that one or more of these articles will inspire or augment your research as you begin your Fall term at your respective institutions. We are, as always, extremely grateful for our contributors, reviewers, and readers, without whom all of the scholars in our fields would be left adrift. Thank you!